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New Normal

Walmart’s New Embrace of Gay Employees a Sign of Corporate Shift

The nation’s largest private-sector employer has quietly extended benefits to domestic partners. Daniel Gross on how support for committed same-sex relationships became the norm in America’s corporate establishment.

Walmart didn’t stand up and unfurl a giant rainbow flag. With open-enrollment season coming up, it sent out a postcard, reproduced below, announcing new items available for 2014: a vision plan, new information about quitting tobacco. Oh, and “full-time associates can cover any spouse or domestic partner.” Starting next year, Walmart employees who work more than 34 hours per week can have their domestic partners—gay or straight—covered under company-offered health insurance and that new vision plan. “The company is continually looking at its benefits programs and seeing what new features can be added,” said Randy Hargrove, a spokesman at Walmart. “Enrolling domestic partners is just one of the things that is being added.” According to a memo, the “full suite” of benefits also includes access to a discount card and spouse/partner life insurance.

Walmart’s move is a sign of how normal it has become for companies to acknowledge, welcome, and seek to embrace their gay employees. Public opinion is coming around, and the Supreme Court invalidated the Defense of Marriage Act, but gay marriage is not quite mainstream in the U.S. It is legal only in 13 states, and the fight for equality is a long way from over. Yet America’s corporate establishment is quietly, steadily, indicating its acceptance and support for committed same-sex relationships. “We’re at a moment where a majority of the Fortune 500 offer domestic-partner benefits,” said Deena Fidas, director of workplace-equality programs for the Human Rights Campaign in Washington.

The Human Rights Campaign says 62 percent of Fortune 500 companies have domestic-partner health-care benefits, up from 34 percent in 2002 and 53 percent in 2006. (Its corporate equality index can be seen here.) According to a national survey of employer-sponsored health plans by Mercer, the human resources consulting firm, the percentage of companies with more than 10 employees making coverage available to same-sex domestic partners rose from 25 percent in 2009 to 52 percent in 2011, and bumped up to 54 percent in 2012. J.D. Piro, senior vice president at Aon Hewitt, a large human-resources consulting firm, said that about 75 percent of employers it surveys offer same-sex domestic-partner benefits. At these companies, when enrollment periods open, people can submit marriage licenses, or partner affidavits, and qualify for benefits available to married couples.

The trend started in high-end professional services industries such as law, accounting, and finance, said Joan Smyth, partner at Mercer Consulting. “It was a higher-end white-collar phenomenon.” But it has spread to lower-paying industries. The motivation is the same at the lower end of the labor market as it is at the higher end: to keep up with competition and remain an attractive employer. Political correctness has little to do with it. “It’s really a decision on the part of employers that they want to attract and retain employees and have a productive workforce,” said Piro. “The question becomes, given the industry that you’re in, how do you go about attracting and retaining them? What kind of benefits do you have to provide?”

In retail, apparently, benefits for domestic partners—same sex and opposite sex alike—are what you now have to provide. In a memo discussing the move, Walmart noted that “of 30 retail competitors, all but two (Publix and Stop and Shop union plan) provide either same- or opposite-sex domestic partner coverage.” (Put another way, Walmart is extraordinarily late to this particular party.)

Companies have other reasons for extending such benefits. It gives much greater flexibility in recruiting employees from other states or moving employees from operations in one state to another. Employers such as General Electric or Bank of America often want to move employees from, say, New York to North Carolina and then to Iowa, and then on to California. The differential treatment of marriage by states may make some employees think twice about moving. If benefits are tied to marriage, they could theoretically be invalidated if an employee moves to a state where her marriage isn’t recognized. But if a company offers domestic-partner benefits, “it doesn’t matter if you move from a marriage-recognition state to a non-recognition state,” said Piro.

Companies generally have found that offering benefits to same-sex partners doesn’t inspire a backlash and really doesn’t cost that much. “Anecdotally I can tell you that the take-up rate is fairly small,” said Smyth. Typically, between 1 and 2 percent of employees take companies up on their offers.

Walmart’s move comes against the backdrop of more vocal corporate support for gay civil-rights issues. “When we were watching Proposition 8 unfold in 2008, just a few companies wanted to speak out, like PG&E and Levi Strauss,” said Fidas. But New York’s campaign for gay marriage in 2011 and 2012 represented a real sea change, as dozens of major companies and their CEOs stepped up, including Lloyd Blankfein of Goldman Sachs. Now Eli Lilly, the large pharmaceutical company based in Indiana, is helping to spearhead a campaign against a state constitutional ban on gay marriage in the state.

The battle is far from over, of course. Fidas notes that in 29 states, an employee can be fired legally for being gay. Plenty of companies don’t offer benefits to same-sex spouses and partners. And there is wide variation by industry. Ninety-six percent of pharmaceutical companies offer such benefits, says Smyth, but less than 30 percent of companies in heavy equipment, mining, and construction do so.

In certain industries, all it takes is a market leader to act and others follow suit. Smaller companies tend to follow the lead of larger ones. But ExxonMobil, which is the second-largest U.S. company by revenue behind Walmart, the second-largest U.S. corporation by market capitalization behind Apple, and the leading energy company, has been hostile to calls to add sexual orientation to its corporate statement on equal opportunity. Said Fidas: “ExxonMobil remains a significant holdout with respect to LGBT equality and in many ways an outlier.”

For advocates such as Fidas, it has long been a mark of frustration that the two companies that sit atop the Fortune 500—Walmart and ExxonMobil—were unwilling to extend greater recognition to gay employees. As of this week, it’s one down, one more to go.